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Topic: E-rate and Block Grant Information
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Jerry P. Becker

Posts: 16,576
Registered: 12/3/04
E-rate and Block Grant Information
Posted: Jun 13, 1998 12:57 PM
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From the NSTA Legislative Update -- June 12, 1998



Late this afternoon (Friday, June 12) the Federal
Communications Commission (FCC) decided to continue
funding the universal service (e-rate) program for
schools and libraries, although some changes are being
made. The commission voted to

--- extend the length of the initial funding year for
disbursement to schools and libraries from 12 to 18
--- freeze the amounts collected from
telecommunications companies to support the program at
current rates ($325 million per quarter)
--- revise the disbursement rules to ensure that the most
disadvantaged schools and libraries get priority for

Overall, the amount of money to be collected from
telecommunications companies is being lowered an
equivalent of about 43 percent, from the maximum of
$2.25 billion originally set for the first 12 months of
the program.

This is being done by extending the first year of the
program from 12 to 18 months (January 1, 1998 - June
30, 1999). By the end this extended year, companies
will have contributed $1.9 billion (through June 1999).

After the first year, the e-rate program will run on a
12-month fiscal year cycle, beginning July 1 of each
year to more closely coincide with school year

For the 1998-1999 cycle, schools and libraries whose
applications are approved should begin to receive
discounts this summer, says the FCC.

According to FCC Chair Bill Kennard, spreading out the
disbursements over a longer period for the first year
will allow the e-rate to meet the demand and ensure
that the poorest school districts receive priority
assistance. More than 30,000 applications from schools
and libraries requesting $2.02 billion in first-year
funding have been received.

Of these applicants, 75 percent requested discounts
totaling less than $25,000, and 53 percent less than
$10,000. Of the total fund requests, 53 percent came
from the nation's poorest schools and libraries --
those that would receive the greatest discounts.
Wealthier schools that have applied for the smaller
discounts make up only 0.3 percent of the total funds

Because of the possibility that the revised funding
amounts will not fully satisfy the estimated demand
from the 30,000 applications, the commission revised
its rules of priority. In cases where demand exceeds
the level of funding available, the FCC concluded that
the best approach is to provide full support to all
schools and libraries for recurring services (such as
telecommunications services and Internet access) but to
provide support for internal connections only to the
most disadvantaged schools and libraries.

FCC's Kennard said the commission's action today will
not increase phone bills. The charges, he said, would
be more than offset by additional reductions, effective
July 1, in other fees phone companies pay.

The FCC commissioners 3-2 vote on reworking the e-rate
program fell along party lines, with Democrats
supporting the program.

Today's ruling comes on the heels of intense pressure
from many in Congress_culminated by a heated hearing
of the Senate Commerce Subcommittee on Communications
on Wednesday, June 10---to halt the program. The
debate began after AT&T and MCI announced they would
add charges roughly equal to 5 percent of every
consumers' long-distance bill in July.

Today's FCC ruling, however, does not prevent phone
companies from putting these fees on phone bills.
According to Associated Press, long-distance company
representatives, speaking on condition of anonymity,
say they will probably continue to spell out charges
for the Internet and other government-mandated
subsidies on customers' phone bills.

To read today's FCC ruling, go to "Headlines" at


Some Background on the Universal Service Fund

Universal service is not new. In the 1930s, Congress
passed the first Telecommunications Act, requiring
telephone companies to contribute to a universal
service fund that would ensure all citizens---
especially those in poor, rural, and hard-to-reach
areas of the country---access to phone service.

In the 1996 rewrite of the Telecommunications Act,
Congress expanded the concept of universal service to
include universal access to advanced telecommunications
services for schools and libraries through discounts
from 20 to 90 percent (depending on poverty level) on
telecommunications and information services such as
Internet access, local and long distance telephone
service, and internal wiring

To pay for the e-rate program, telecommunication
companies were required to pay $325 million each
quarter for these subsidies. In exchange, Congress
reduced the charges that these long distance phone
companies pay to connect to local telephone networks.


Developments on the Block Grant Front

House and Senate conferees reached an agreement on
Wednesday on HR 2646, The Education Savings Act for
Public and Private Schools bill, which would permit
parents to contribute up to $2,000 per year, per child,
into an account that would allow for tax-free earnings
on the savings. The funds could be used for
elementary, secondary, and college costs, including
private school tuition.

The conferees dropped two provisions in the
Senate-passed version of the bill (S. 1133, the
so-called "Coverdell bill") in an effort to garner
Democratic support.

The first provision would have bundled a variety of
elementary and secondary education programs at the
Department of Education into a block grant to be
administered by states with no strings attached.
(Although the Eisenhower Professional Development
Program was NOT included in this block grant provision,
the defeat of the block grant proposal itself in
conference is an important step.)

The second provision that was dropped would have
prevented the President's voluntary national testing
program for fourth and eighth-graders in reading and
math from moving forward.

The House is expected to vote on the conference report
next week, and the Senate the week after. President
Clinton is still threatening to veto the bill, which he
sees as a voucher program.

Despite, the defeat of the block grant proposal in the
above bill, the call for block grants will be heard
again, probably many times. Senator Slade Gorton
(R-WA), champion of the block grant provision, is
expected to lobby for the inclusion of block grants in
the Labor, HHS, Education appropriations bill when it
comes before the Senate Appropriations Subcommittee for
mark up on July 7. (The House Subcommittee on Labor,
HHS, and Education plans to mark up its FY 1999
spending bill on June 24th.) Both of these dates may
slip, but the appropriations bills are on the horizon.

More on the appropriations bills in an upcoming NSTA
Legislative Update
Jerry P. Becker
Dept. of Curriculum & Instruction
Southern Illinois University
Carbondale, IL 62901-4610 USA
Fax: (618)453-4244
Phone: (618)453-4241 (office)

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